According to The Latin American Tribune, ratings agency Standard & Poor’s decision to downgrade Puerto Rico’s general-obligation bonds to speculative, or "junk," status was “unfair,” according to Governor Alejandro García Padilla.
“This is a time for the country to grow. It’s an opportunity to begin from zero,” he said at a hastily arranged press conference following the announcement by S&P.
“Even though my administration is not responsible for this situation, as governor I take responsibility for getting the (island) out of it,” said García Padilla, who took office just over a year ago.
COMMENT: The island’s treasury secretary, Melba Acosta, recognized that the downgrade is going to move up the obligation to pay part of Puerto Rico’s $70 billion debt.
S&P cut its ranking of Puerto Rico’s debt from BBB- to BB+ and suggested further cuts could be forthcoming.
The New York City-based agency also scaled back its rating of bonds issued by the Government Development Bank for Puerto Rico by two levels to BB.
S&P said it would have downgraded Puerto Rican bonds by two or more steps if not for recent moves by the government in San Juan to slash budget deficits and curb public employee pensions.
The intention announced by the current administration to reduce the deficit for the 2014 fiscal year by $170 million and present a balanced budget for fiscal 2015 could lead to an improvement in its credit rating over the long term, S&P said.
The island is now in its eighth year of recession and has an unemployment rate of more than 15%.
To make matters worse, violent crime in the US territory has a crime rate double that of Chicago, which accords Puerto Rico as having a crime rate worst than the most populated US city on the mainland.